A management shakeup at Genentech following Roche's takeover in March clearly signals a transformation for the biotech. Among the key leadership changes is the appointment of Roche commercial pharma head Pascal Soriot to CEO of Genentech.

Still unclear is what the appointment of the Roche insider, announced April 14, means for Genentech's current chairman and CEO Arthur Levinson - the lauded chief executive who nurtured an innovative, entrepreneurial culture at Genentech during his 14 years at its helm.

Roche says Levinson remains a critical leader of the company. Officially, he will serve as chair of Genentech's new board of directors and help oversee the integration of the big pharma and biotech. He will also serve as an advisor to Genentech's Research and Early Development center and will join the Scientific Resources Board, Genentech's external advisory group.

"I'm in particular delighted that so many outstanding colleagues from Genentech have joined the combined organization and that Art Levinson [will take] a very active role as we go forward," Roche CEO Severin Schwan said during the company's first quarter sales and earnings call April 16, following the announcement.

Key Leaders Headed For The Exit?

But putting Soriot in place to oversee the day-to-day operations of Genentech suggests Levinson might only stay on board long enough to oversee the integration and meet contractual obligations.

Likewise, another pivotal Genentech leader, President-Product Development Susan Desmond-Hellman, appears headed for the exit. She will hand off her current responsibilities mid-year and "contribute to Genentech in an advisory role," Roche said. Desmond-Hellman joined Genentech in 1995 as a clinical scientist and has played a critical role in shaping the biotech.

"I don't think Art and Sue are going to stay on for long," one pharmaceutical analyst speculated. "Levinson, being an advisor, it seems as though he is going to make sure the transition is smooth and then he'll leave."

The management changes aren't surprising. It has been widely speculated since Roche first announced its unsolicited bid for Genentech in July that a full takeover by Roche would spark an exodus among the biotech's talented ranks, including its army of scientists, who may not be inclined to work under a big pharma's bureaucratic umbrella (¹ Also see "Roche’s High Stakes Gambit For Genentech" - Pink Sheet, 28 July, 2008., p. 3).

The Swiss drug maker wasn't blind to the potential losses, but was nonetheless prepared to take the blow in order to gain full control of drugs like Avastin and Herceptin and access to its pipeline. After months of haggling, the company acquired the minority stake in Genentech it did not already own for $95 per share in March (² Also see "Roche Wins Genentech After Months-Long Battle" - Pink Sheet, 26 March, 2009.).

Roche is aiming to complete a more detailed integration plan by the middle of the year and complete the process by the end of the year, Schwan added.

Soriot will lead all of Roche's pharma activities in the U.S. and report to Schwan, effective May 1. Roche previously announced it would combine the commercial operations of Roche Pharma North America and Genentech in South San Francisco.

The exec previously headed the commercial operations of Roche's pharma unit. Prior to that, he served as head of strategic marketing for Roche, joining the company in 2006. He worked as chief operating officer of Aventis USA (later Sanofi-Aventis USA) from 2002.

Hoffmann-LaRoche CEO George Abercrombie will assist Soriot with the transition of Roche's U.S. commercial headquarters from Nutley, N.J. to South San Francisco, the company added.

Roche Maintains Genentech's Research Heads

Two of Genentech's key research leaders will maintain positions within the combined company. Richard Scheller will lead Genentech's research and early development as Exec VP research and early development, Genentech. The division will operate as an independent center within Roche. Scheller will report to Schwan.

Marc Tessier-Lavigne, currently exec VP Genentech research drug discovery, will continue reporting to Scheller and succeed him as exec VP research. He has also been appointed Genentech's chief scientific officer.

Roche has maintained that it is aiming to maintain the corporate culture at Genentech, particularly its innovative research model.

"Genentech Research and Early Development Center, under the leadership of Richard Scheller, will be led independently from the current Roche structure," Schwan reiterated during the call.

"It will directly report to me and keep its ongoing processes, structure, decision making for research and early development up to Phase II proof-of-concept, and after that the compounds are then forwarded into late development as part of the global organization," he said.

Other Commercial, Development Changes...

Roche announced, among other changes, Exec VP and Chief Financial Officer David Ebersman and Exec VP Secretary and Chief Compliance Officer Steve Juelsgaard will depart the company.

Roche Corporate Business Development Head Steve Krognes will be appointed CFO of Genentech and senior VP regional head finance and IT pharma North America.

Roche Pharma North America VP Secretary and Legal Affairs Rick Kentz will be appointed senior VP secretary and chief compliance officer for the combined organization with responsibilities for legal and corporate services.

Ian Clark, Genentech's exec VP commercial operations, will take over responsibility for the Roche Pharma division as exec VP global marketing and chief marketing officer.

Hal Barron, senior VP Genentech development and chief medical officer, will be appointed exec VP head global development responsible for early and late development for three disease areas: oncology, immunology/tissue growth repair and virology. He will also serve as chief medical officer for the combined U.S. organization.

- Jessica Merrill (j.merrill@elsevier.com)

Genentech Reorganization Signals Shift To New Model Under Roche

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